Is There a Cloud Backlash Brewing in Tech?

Despite what seems to be relentless drive toward cloud computing by most of the major tech companies, including most importantly Microsoft and Amazon.com, there appears to be a backlash coming.

The backlash is broken down into two parts:

The first part is a backlash against the large cloud computing providers. Smaller firms working on what has become known as “edge” computing, are making their mark in the industry.

The second part of the backlash to big cloud computing is a focus on local computing, being pushed most notably by Apple.

Richard Waters explains the trend in the Financial Times:

One answer often heard from the start-up investors is that a new form of computing is emerging beyond the reach of the dominant cloud platforms. Companies riding this new trend are springing up like weeds through the cracks in a sidewalk, filling in new parts of the computing landscape that are not easy for the behemoths to address.

Like all tech trends, it has its own buzzword: the rise of the “edge”. It reflects the falling costs and increasing capabilities that are pushing intelligence into more and more devices. That, in turn, is making it easier to collect and process more data locally, far from the centralised cloud data centres. This is not happening in opposition to the cloud, but in parallel with it: devices working on the edge still operate in concert with centralised data centres, which co-ordinate and handle the most intensive data storage and processing needs.

He continues later:

But a countervailing force is also feeding a re-emergence of local computing. None of the factors behind this are new, though they have been gaining strength thanks to some familiar political and technology trends. They include concerns about privacy and control of personal data. Apple, for one, has taken up the banner for this idea, devising ways for its users to keep control of more of their personal data on their own devices. If cloud-first companies such as Google and Facebook face tough questions about centralisation of data, Apple is busy positioning itself as the opposite.

Machine learning — the tool that holds the greatest promise in bringing value to data — is also perfectly suited to the new cloud-plus-edge paradigm. Algorithms trained on large data sets in giant cloud factories can be deployed on to edge devices, where they can draw inferences from locally gathered data. And even though the new 5G telecoms networks promise to bring a jump in capacity for machine-to-machine communications, the cost of shifting masses of data to and from centralised servers will always favour local data handling where possible.

Jeremy Jones, CFA

Jeremy Jones, CFA is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Jeremy is a contributing editor of youngresearch.com.